2018 Q3 Form 10-Q Financial Statement

#000163411718000035 Filed on August 22, 2018

View on sec.gov

Income Statement

Concept 2018 Q3 2017 Q3
Revenue $337.5M $355.7M
YoY Change -5.12% 48.69%
Cost Of Revenue $270.9M $290.5M
YoY Change -6.76% 51.45%
Gross Profit $66.61M $65.20M
YoY Change 2.16% 36.31%
Gross Profit Margin 19.74% 18.33%
Selling, General & Admin $99.14M $99.90M
YoY Change -0.75% 19.01%
% of Gross Profit 148.84% 153.22%
Research & Development
YoY Change
% of Gross Profit
Depreciation & Amortization $16.50M $15.00M
YoY Change 10.0% 16.28%
% of Gross Profit 24.77% 23.01%
Operating Expenses $99.14M $99.90M
YoY Change -0.75% 19.01%
Operating Profit -$49.07M -$55.54M
YoY Change -11.64% 5.26%
Interest Expense -$3.500M -$3.000M
YoY Change 16.67% 328.57%
% of Operating Profit
Other Income/Expense, Net
YoY Change
Pretax Income -$52.59M -$58.58M
YoY Change -10.21% 9.64%
Income Tax -$13.97M -$23.79M
% Of Pretax Income
Net Earnings -$38.62M -$34.78M
YoY Change 11.04% 24.6%
Net Earnings / Revenue -11.44% -9.78%
Basic Earnings Per Share -$0.82 -$0.75
Diluted Earnings Per Share -$0.82 -$0.75
COMMON SHARES
Basic Shares Outstanding 46.92M shares 46.52M shares
Diluted Shares Outstanding 46.92M shares 46.52M shares

Balance Sheet

Concept 2018 Q3 2017 Q3
SHORT-TERM ASSETS
Cash & Short-Term Investments $13.30M $14.20M
YoY Change -6.34% 59.55%
Cash & Equivalents $13.26M $14.19M
Short-Term Investments
Other Short-Term Assets $18.70M $13.50M
YoY Change 38.52% 56.98%
Inventory $729.9M $770.7M
Prepaid Expenses
Receivables $99.80M $112.5M
Other Receivables $0.00 $0.00
Total Short-Term Assets $867.9M $927.5M
YoY Change -6.43% 17.67%
LONG-TERM ASSETS
Property, Plant & Equipment $108.1M $113.1M
YoY Change -4.42% 5.35%
Goodwill $49.28M $329.5M
YoY Change -85.04% 17.11%
Intangibles $213.9M $206.4M
YoY Change 3.66% 4.49%
Long-Term Investments
YoY Change
Other Assets $41.66M $42.20M
YoY Change -1.27% 8.18%
Total Long-Term Assets $413.0M $691.1M
YoY Change -40.25% 10.55%
TOTAL ASSETS
Total Short-Term Assets $867.9M $927.5M
Total Long-Term Assets $413.0M $691.1M
Total Assets $1.281B $1.619B
YoY Change -20.87% 14.52%
SHORT-TERM LIABILITIES
YoY Change
Accounts Payable $463.7M $511.5M
YoY Change -9.34% -8.69%
Accrued Expenses $93.23M $89.93M
YoY Change 3.67% 114.39%
Deferred Revenue $15.50M
YoY Change
Short-Term Debt $100.0M $100.0M
YoY Change 0.0%
Long-Term Debt Due $100.0M $100.0M
YoY Change 0.0%
Total Short-Term Liabilities $657.0M $701.4M
YoY Change -6.34% 16.49%
LONG-TERM LIABILITIES
Long-Term Debt $130.2M $120.1M
YoY Change 8.41% 380.4%
Other Long-Term Liabilities $58.85M $96.46M
YoY Change -38.99% 28.65%
Total Long-Term Liabilities $58.85M $96.46M
YoY Change -38.99% 28.65%
TOTAL LIABILITIES
Total Short-Term Liabilities $657.0M $701.4M
Total Long-Term Liabilities $58.85M $96.46M
Total Liabilities $849.2M $937.8M
YoY Change -9.45% 27.12%
SHAREHOLDERS EQUITY
Retained Earnings -$258.8M -$2.420M
YoY Change 10595.25%
Common Stock $720.2M $711.3M
YoY Change 1.24% 1.35%
Preferred Stock
YoY Change
Treasury Stock (at cost) $29.66M $28.02M
YoY Change 5.85% 11.1%
Treasury Stock Shares 3.115M shares 2.855M shares
Shareholders Equity $431.7M $680.9M
YoY Change
Total Liabilities & Shareholders Equity $1.281B $1.619B
YoY Change -20.87% 14.52%

Cashflow Statement

Concept 2018 Q3 2017 Q3
OPERATING ACTIVITIES
Net Income -$38.62M -$34.78M
YoY Change 11.04% 24.6%
Depreciation, Depletion And Amortization $16.50M $15.00M
YoY Change 10.0% 16.28%
Cash From Operating Activities -$27.35M -$56.30M
YoY Change -51.42% 123.41%
INVESTING ACTIVITIES
Capital Expenditures $8.240M $7.881M
YoY Change 4.56% 27.46%
Acquisitions $0.00
YoY Change -100.0%
Other Investing Activities -$1.100M -$1.200M
YoY Change -8.33% -82.09%
Cash From Investing Activities -$9.314M -$9.100M
YoY Change 2.35% -28.91%
FINANCING ACTIVITIES
Cash Dividend Paid
YoY Change
Common Stock Issuance & Retirement, Net $0.00 $0.00
YoY Change -100.0%
Debt Paid & Issued, Net
YoY Change
Cash From Financing Activities $33.80M 60.50M
YoY Change -44.13% 228.8%
NET CHANGE
Cash From Operating Activities -$27.35M -56.30M
Cash From Investing Activities -$9.314M -9.100M
Cash From Financing Activities $33.80M 60.50M
Net Change In Cash -$2.867M -4.900M
YoY Change -41.49% -75.0%
FREE CASH FLOW
Cash From Operating Activities -$27.35M -$56.30M
Capital Expenditures $8.240M $7.881M
Free Cash Flow -$35.59M -$64.18M
YoY Change -44.54% 104.51%

Facts In Submission

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CY2017Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2018Q3 us-gaap Weighted Average Number Of Diluted Shares Outstanding
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CY2018Q3 us-gaap Basis Of Accounting
BasisOfAccounting
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:8px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Basis of Presentation and Consolidation</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our condensed consolidated financial statements reflect our condensed consolidated financial position, results of operations and cash flows in conformity with accounting principles generally accepted in the United States (&#8220;GAAP&#8221;). In the opinion of the Company&#8217;s management, the accompanying unaudited condensed consolidated financial statements of the Company contain all adjustments (consisting of only normal recurring adjustments) necessary to present fairly its consolidated financial position and the results of its operations and cash flows for the periods reported. These condensed consolidated financial statements are condensed and therefore do not include all of the information and footnotes required by GAAP. All material intercompany accounts and transactions have been eliminated in consolidation. </font></div><div style="line-height:120%;padding-top:4px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">On August 3, 2017, we acquired Student Brands, LLC. The condensed consolidated financial statements for the 13 weeks ended July 28, 2018 include the financial results of Student Brands in the DSS segment and the condensed cons</font><font style="font-family:inherit;font-size:9.5pt;">olidated financial statements for the 13 weeks ended July 29, 2017 exclude the financial results of Student Brands. </font><font style="font-family:inherit;font-size:10pt;"> </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our business is highly seasonal. Our quarterly results also may fluctuate depending on the timing of the start of the various schools' semesters, as well as shifts in fiscal calendar dates. These shifts in timing may affect the comparability of our results across periods. Our fiscal year is comprised of 52 or 53 weeks, ending on the Saturday closest to the last day of April. Due to the seasonal nature of the business, the results of operations for the 13 weeks ended July 28, 2018 are not indicative of the results expected for the 52 weeks ending April&#160;27, 2019 (Fiscal 2019). </font></div><div style="line-height:120%;padding-top:4px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For our retail operations (BNC and MBS Direct), sales are generally highest in the second and third fiscal quarters, when students purchase and rent textbooks, and lowest in the first and fourth fiscal quarters. Sales attributable to our MBS Wholesale business are generally highest in our first and third quarter, as it sells textbooks for retail distribution. Student Brands' sales and operating profit are realized relatively consistently throughout the year.</font></div><div style="line-height:120%;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;"></font></div></div>
CY2018Q3 us-gaap Description Of New Accounting Pronouncements Not Yet Adopted
DescriptionOfNewAccountingPronouncementsNotYetAdopted
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 3. </font><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Recent Accounting Pronouncements</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In February 2016, the Financial Accounting Standards Board ("FASB") issued </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">ASU No. 2016-02, Leases (Topic 842) ("ASU 2016-01")</font><font style="font-family:inherit;font-size:10pt;"> to increase transparency and comparability by providing additional information to users of financial statements regarding an entity's leasing activities. The revised guidance seeks to achieve this objective by requiring reporting entities to recognize lease assets and lease liabilities on the balance sheet for substantially all lease arrangements. We are required to adopt this standard in the first quarter of Fiscal 2020 and early adoption is permitted. The guidance will be applied on a modified retrospective basis beginning with the earliest period presented. We are currently evaluating this standard to determine the impact of adoption on our condensed consolidated financial statements.</font></div></div>
CY2018Q3 us-gaap Nature Of Operations
NatureOfOperations
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:16px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-weight:bold;">Note 1. </font><font style="font-family:inherit;font-size:10pt;font-weight:bold;text-decoration:underline;">Organization</font></div><div style="line-height:120%;padding-top:8px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Description of Business</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Barnes &amp; Noble Education, Inc. (&#8220;BNED&#8221;) is one of the largest contract operators of physical and virtual bookstores for higher education and K-12 institutions across the United States, one of the largest textbook wholesalers, and a leading provider of digital education services. Through its Barnes &amp; Noble College (&#8220;BNC&#8221;) and MBS Textbook Exchange (&#8220;MBS&#8221;) subsidiaries, Barnes &amp; Noble Education operates </font><font style="font-family:inherit;font-size:10pt;">1,437</font><font style="font-family:inherit;font-size:10pt;"> physical and virtual bookstores and serves more than </font><font style="font-family:inherit;font-size:10pt;">6 million</font><font style="font-family:inherit;font-size:10pt;"> students, delivering essential educational content and tools within a dynamic retail environment. Additionally, through our Student Brands subsidiary and associated websites, a leading direct-to-student subscription-based writing services business, we offer services to approximately </font><font style="font-family:inherit;font-size:10pt;">100,000</font><font style="font-family:inherit;font-size:10pt;"> subscribers, by offering student assistance through the writing process and journey.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">The strengths of our business includes our ability to compete by developing new products and solutions to meet market needs, our large footprint with direct access to students and faculty, our well-established, deep relationships with partners and stable, long-term contracts and our well-recognized brands. We expect to continue to grow our business by introducing scalable and advanced digital solutions focused largely on the student, increasing market share with new accounts, and expanding our strategic opportunities through acquisitions and partnerships.</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Effective in the fourth quarter of Fiscal year 2018, we have three reportable segments: BNC, MBS, and Digital Student Solutions ("DSS"), as described in</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> Note 5. Segment Reporting</font><font style="font-family:inherit;font-size:10pt;">. Prior to the fourth quarter of Fiscal year 2018, BNC and MBS were previously our only reportable segments. </font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">For additional information related to the strategy and growth drivers for our</font><font style="font-family:inherit;font-size:10pt;font-style:italic;"> </font><font style="font-family:inherit;font-size:10pt;">business, see </font><font style="font-family:inherit;font-size:10pt;font-style:italic;">Part I - Item 1. Business - Overview </font><font style="font-family:inherit;font-size:10pt;">in our Annual Report on Form 10-K for the year ended April 28, 2018.</font></div></div>
CY2018Q3 us-gaap Prior Period Reclassification Adjustment Description
PriorPeriodReclassificationAdjustmentDescription
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:8px;text-align:justify;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Reclassifications</font></div><div style="line-height:120%;padding-top:4px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">Our condensed consolidated financial statements reflect the following reclassifications for consistency with the current year presentation: 1) Cost of Sales expenses primarily related to facility costs and insurance related to corporate services have been reclassified to Selling and Administrative Expenses; and 2) For our digital rental products, we have reclassified Rental Income to Product Sales and Other, and have reclassified Rental Cost of Sales to Product and Other Cost of Sales, with no impact to Gross Margin. Digital rental revenue and digital rental cost of sales are recognized at the time of delivery and are not deferred over the rental period.</font></div></div>
CY2018Q3 us-gaap Use Of Estimates
UseOfEstimates
<div style="font-family:Times New Roman;font-size:10pt;"><div style="line-height:120%;padding-top:12px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;font-style:italic;font-weight:bold;">Use of Estimates</font></div><div style="line-height:120%;padding-top:8px;text-align:justify;text-indent:24px;font-size:10pt;"><font style="font-family:inherit;font-size:10pt;">In preparing financial statements in conformity with GAAP, we are required to make estimates and assumptions that affect the reported amounts in the condensed consolidated financial statements and accompanying notes. Actual results could differ from those estimates.</font></div></div>

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